GBP/USD Daily Fundamental Forecast – December 05, 2016
GBPUSD continues to remain strong amidst all the turmoil in the euro region and also the waves of dollar strength and weakness. The pound seems to have found some sweet spot and the bulls seem to like it and have been taking it higher and higher over the past few days. In fact, the bulls have made a stand and ensured that the pound is not taken lower despite the fact that the dollar has been smashing through to new highs against almost all the other currencies. And this has been happening despite the fact that the latest data from the UK has not been great and has been generally mixed.
On Friday, the pair received a further boost as the NFP report came in. The report showed that the employment numbers were better but the average wages were becoming lesser and lesser. This puts a question mark on further hikes in 2017 from the Fed. The December rate hike has already been priced into the markets and the investors and traders are already looking towards 2017 and this kind of data should be a cause of concern for the Fed. This caused a round of USD weakness which was utilised by the pound to push through 1.27.
Today, there is the Services PMI data from the UK which the traders would be looking forward to. But the No vote in the Italy should cause some concern in the European markets and this is likely to keep the pound subdued for the day. The vote will weigh on the euro and this is likely to affect the pound as well and so we can expect some consolidation and ranging in the pound for the day, on either side of 1.2700 as focus will be firmly on the euro. If the US yields continue to fall this week, we can expect the dollar to continue its weakness and this could help the GBPUSD pair to push towards 1.300 during the course of this week.